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Property > Transaction for Land > Flashcards

Transaction for Land Flashcards

1
Q

What is merger (closing)?

A

When the contract merges into the deed.

When ownership of the property transfers from the buyer to the seller.

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2
Q

What is liability for the property based on?

A

Leading up to closing, all liability is based on the contract.

After closing, all liability is based on the deed.

A party CANNOT enforce a contract provision that is NOT in the deed after the merger/closing. They can ONLY enforce what is included in the deed.

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3
Q

What is the doctrine of equitable conversion?

A

Equity regards as done that which ought to be done.

The buyer is viewed in equity as the owner from the date of the contract.

Under equitable conversion, the buyer has the risk of loss for any damages to the property from the time of that they sign the contract moving forward.

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4
Q

What is required by the statute of frauds in a land transaction?

A
  1. Signed by the party to be bound
  2. Description of the property
  3. Price
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5
Q

What are the two exceptions to the SoF requirement for a land transaction?

A
  1. Part performance (need 2/3 of the below)
    a. Buyer takes possession
    b. Buyer makes payments
    c. Buyer makes substantial or valuable improvements on the property
  2. Estoppel: when unconscionable injury would result if an oral contract was not enforced after one party has been induced by the other to materially change their position in reliance on the contract
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6
Q

What is marketable title?

A

Title that is free from an unreasonable risk of litigation.

if the contract is silent about the quality of title, a marketable title is implied.

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7
Q

What defects render a title unmarketable?

A
  1. The seller doesnt own the estate that they purport to sell
    (Ex: the seller has a life estate but they are trying to convey a fee simple)
  2. The title is subject to UNAPPARENT encumbrances
    (Ex: mortgages, easements that are not clearly visible, covenants, leases, etc.)
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8
Q

What happens if the buyer learns of title defects before closing?

A

The buyer must notify the seller AND allow reasonable opportunity for the seller to cure the defects

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9
Q

What happens if the seller fails to deliver marketable title at closing?

A
  1. The buyer is excused from performing the contract AND
  2. The seller is liable for breach of contract (and the buyer can seek damages)
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10
Q

Does a seller have a duty to disclose defects?

A

Traditional view: no, caveat emptor (buyer beware)
Modern view: maybe, the seller has a duty to disclose MATERIAL defects

Material defects are those that a reasonable person would attach importance to when deciding whether to buy.

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11
Q

What are stigma statutes in relation to the duty to disclose defects?

A

Statutes that protect sellers from having to disclose psychological or prejudicial factors that might affect market value.

Ex: if someone died in the home

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12
Q

What is the implied warranty of quality/fitness/suitability?

A

Builders, developers, or other merchants of housing are required to exercise the standard skill and care customarily used by similar merchants.

Most courts hold that it only applies to HIDDEN or latent defects.

Modern trend: both the initial AND subsequent owners can sue.

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13
Q

What are the requirements of a deed?

A
  1. Execution
    * Property description
    * Signed by grantor
  2. Delivery
    * Grantor has intent to pass title
    * Physical transfer is not required
    * If the deed is recorded, recordation presumes delivery
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14
Q

What are the three types of deed?

A
  1. General warranty deed
  2. Special warranty deed
  3. Quitclaim deed
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15
Q

What is a general warranty deed?

A

A deed that warrants against all defects in title, whether they arose before of after the grantor took title.

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16
Q

What is a special warranty deed?

A

A deed that warrants only against the grantor’s acts, but NOT the acts of others.

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17
Q

What is a quitclaim deed?

A

A deed that contains NO warranties of any kind.

It conveys only whatever title the grantor has (if any).

18
Q

What are the six express warranties of a general warranty deed (and special warranty deeds when a result of the grantor’s acts or omissions)?

A

Present covenants:
1. Covenant of seisin
2. Covenant of right to convey
3. Covenant against encumbrances

Future covenants:
4. Covenant of general warranty
5. Covenant of quiet enjoyment
6. Covenant of further assurances

19
Q

What is a present covenant?

A

A covenant that is broken, if ever, at the time the deed is delivered.

The statute of limitations begins running when the deed is delivered.

20
Q

What is a future covenant?

A

A promise that the grantor will do something in the future.

The statute of limitations begins running at the moment of the breach.

21
Q

What is the covenant of seisin?

A

The grantor warrants that he owns the estate that he purports to convey.

Ex: if they purport to convey a fee simple, that they actually have a fee simple - not a life estate, etc.

22
Q

What is the covenant of the right to convey?

A

The grantor warrants that he has the right to convey title.

Usually the same as the covenant of seisin, but in some cases, a person may have legal title but no right to convey (ex: a trustee, someone leasing the property, etc.)

23
Q

What is the covenant against encumbrances?

A

The grantor warrants that there are no UNDISCLOSED encumbrances on the property.

Basically the same as the duty to deliver marketable title in the contract stage.

24
Q

What is the covenant of general warranty?

A

The grantor warrants he will defend against lawful claims and will compensate the grantee for any loss that the grantee may sustain by assertion of superior title by other claimants.

Ex: later, someone comes along and claims to have title to the same land. The grantee can sue the grantor for breach of the covenant of general warranty to receive compensatory damages.

25
Q

What is the covenant of quiet enjoyment?

A

The grantor warrants that the grantee will not be disturbed in possession and enjoyment of the property by assertion of superior title.

Pretty much the same as covenant of general warranty, and is usually omitted from general warranty deeds.

26
Q

What is the covenant of further assurances?

A

The grantor promises that he will execute any other documents, or take any other actions, required to perfect the title conveyed.

27
Q

What are the two theories of mortgages?

A
  1. Title theory: the lender takes legal title to the land and the borrower only has equity of redemption
  2. Lien theory (most common): the borrower keeps legal title and the lender only has a lien on the property
28
Q

What is an installment land sale contract?

A

A substitute for a regular mortgage where the buyer takes possession of the land immediately, but the seller contracts to deliver title to the buyer only after the buyer has paid the purchase price plus interest.

Financing is provided by the seller, not a bank or institutional lender.

29
Q

What is a foreclosure?

A

A forced sale of an asset where the proceeds of the sale are used to pay off the debt.

30
Q

What is equity of redemption?

A

The right of a mortgagor (borrower) to reclaim their property by paying off the outstanding mortgage debt, even after defaulting on the loan.

Foreclosure cuts off the borrower’s equity of redemption.

31
Q

What are the two indexes for recorded titles in the US?

A
  1. Grantor-grantee index (most common)
  2. Tract index
32
Q

What is the grantor-grantee index?

A

There are separate indexes for the grantors and the grantees. Both should be used.

Grantor index: all instruments are indexed alphabetically and chronologically by the grantor’s surname

Grantee index: all instruments are indexed alphabetically and chronologically by the grantor’s surname

Start with the grantee index and search backwards. Then use the grantor index to search forward.

33
Q

What is the tract index?

A

Indexes documents by parcel identification number assigned to the particular tract.

34
Q

What is a bona fide purchaser?

A

Someone who purchases an interest in land without notice of another interest already held by a third party.

35
Q

What is the chain of title?

A

The recorded history of a property’s ownership.

36
Q

What is the common law rule for superior title?

A

“Prior in time, prior in effect.”

Controls unless a person can qualify for protection under the applicable recording act.

37
Q

What is the purpose of the recording acts?

A

The recording acts protect subsequent bona fide purchasers against prior unrecorded interests.

38
Q

What are the three types of recording acts?

A
  1. Race statute: the person who records first wins
  2. Notice statute: a subsequent bona fide purchaser, without notice of a prior interest, wins even if they fail to record
  3. Race-notice statute: a subsequent purchaser wins if they do NOT have notice of the prior interest AND record first
39
Q

What is the shelter rule in notice or race-notice statute jurisdictions?

A

A person who takes from a bona fide purchaser protected by the recording act has the same rights as his grantor.

Even if the subsequent purchaser DOES have notice. If the grantor did NOT have notice, the subsequent purchaser still wins.

40
Q

What happens when there are deeds from a common grantor, but some deeds have restrictions and some don’t?

A

If a grantor of multiple lots places restrictions on any remaining unsold lots in writing, the restrictions are binding and enforceable between the grantor and grantee AND against subsequent purchasers.

The subsequent purchaser acquires title subject to EXISTING written restrictions in an earlier purchaser’s deed.

The other grantees can enforce the restrictions.

41
Q

What are the three types of notice a person can have with respect to a prior title claim?

A
  1. Inquiry notice: notice based on the purchaser’s duty to investigate relevant circumstances
  2. Actual notice: personal knowledge of a prior interest
  3. Record notice: notice of a prior interest that would be reveals by a title search (constructive notice)

Property (9 decks)

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